Various organisations & networks from across the world | 18 October 2021
Development banks have no business financing agribusiness
PDBs are public institutions established by national governments or multilateral agencies to finance government programs and private companies whose activities are said to contribute to the improvement of people's lives in the places where they operate, particularly in the Global South. Many multilateral development banks, a significant sub-group of PDBs, also provide technical and policy advice to governments to change their laws and policies to attract foreign investment.
As public institutions, PDBs are bound to respect, protect and fulfil human rights and are supposed to be accountable to the public for their actions. Today, development banks collectively spend over US$2 trillion a year financing public and private companies to build roads, power plants, factory farms, agribusiness plantations and more in the name of "development" – an estimated US$1.4 trillion goes into the sole agriculture and food sector. Their financing of private companies, whether through debt or the purchase of shares, is supposed to be done for a profit, but much of their spending is backed and financed by the public – by people's labor and taxes.
The number of PDBs and the funding they receive is growing.The reach of these banks is also growing as they are increasingly channeling public funds through private equity, “green finance” and other financial schemes to deliver the intended solutions instead of more traditional support to government programs or non-profit projects. Money from a development bank provides a sort of guarantee for companies expanding into so-called high-risk countries or industries. These guarantees enable companies to raise more funds from private lenders or other development banks, often at favorable rates. Development banks thus play a critical role in enabling multinational corporations to expand further into markets and territories around the world – from gold mines in Armenia, to controversial hydroelectric dams in Colombia, to disastrous natural gas projects in Mozambique – in ways they could not do otherwise.
Additionally, many multilateral development banks work to explicitly shape national level law and policy through their technical advice to governments and ranking systems such as the Enabling the Business of Agriculture of the World Bank. The policies they support in key sectors -- including health, water, education, energy, food security and agriculture -- tend to advance the role of big corporations and elites. And when affected local communities, including Indigenous Peoples and small farmers protest, they are often not heard or face reprisals. For example, in India, the World Bank advised the government to deregulate the agricultural marketing system, and when the government implemented this advice without consulting with farmers and their organisations, it led to massive protests.
Public Development Banks claim that they only invest in “sustainable” and “responsible” companies and that their involvement improves corporate behavior. But these banks have a heavy legacy of investing in companies involved in land grabbing, corruption, violence, environmental destruction and other severe human rights violations, from which they have escaped any meaningful accountability. The increasing reliance of development banks on offshore private equity funds and complex investment webs, including so called financial intermediaries, to channel their investments makes accountability even more evasive and enables a small and powerful financial elite to capture the benefits.
It is alarming that Public Development Banks are now taking on more of a coordinated and central role when it comes to food and agriculture. They are a part of the global financial architecture that is driving dispossession and ecological destruction, much of which is caused by agribusiness. Over the years, their investment in agriculture has almost exclusively gone to companies engaged in monoculture plantations, contract growing schemes, animal factory farms, sales of hybrid and genetically modified seeds and pesticides, and digital agriculture platforms dominated by Big Tech. They have shown zero interest in or capacity to invest in the farm, fisher and forest communities that currently produce the majority of the world’s food. Instead, they are bankrolling land grabbers and corporate agribusinesses and destroying local food systems.
Important examples of the pattern we see Public Development Banks engaging in:
The European Bank for Reconstruction and Development and the European Investment Bank have provided generous financing to the agribusiness companies of some of Ukraine's richest oligarchs, who control hundreds of thousands of hectares of land.
SOCFIN of Luxembourg and SIAT of Belgium, the two largest oil palm and rubber plantation owners in Africa, have received numerous financial loans from development banks, despite their subsidiaries being mired in land grabbing, corruption scandals and human rights violations.
Multiple development banks (including Swedfund, BIO, FMO and the DEG) financed the failed sugarcane plantation of Addax Bioenergy in Sierra Leone that has left a trail of devastation for local communities after the company’s exit.
The UK’s CDC Group and other European development banks (including BIO, DEG, FMO and Proparco) poured over $150 million into the now bankrupt Feronia Inc’s oil palm plantations in the DR Congo, despite long-standing conflicts with local communities over land and working conditions, allegations of corruption and serious human rights violations against villagers.
The United Nations’ Common Fund for Commodities invested in Agilis Partners, a US-owned company, which is involved in the violent eviction of thousands of villagers in Uganda for a large-scale grain farm.
Norfund and Finnfund own Green Resources, a Norwegian forestry company planting pine trees in Uganda on land taken from thousands of local farmers, with devastating effects on their livelihoods.
The Japan Bank for International Cooperation and the African Development Bank invested in a railway and port infrastructure project to enable Mitsui of Japan and Vale of Brazil to export coal from their mining operations in northern Mozambique. The project, connected to the controversial ProSavana agribusiness project, has led to land grabbing, forced relocations, fatal accidents and the detention and torture of project opponents.
The China Development Bank financed the ecologically and socially disastrous Gibe III dam in Ethiopia. Designed for electricity generation and to irrigate large-scale sugar, cotton and palm oil plantations such as the gargantuan Kuraz Sugar Development Project, it has cut off the river flow that the indigenous people of the Lower Omo Valley relied on for flood retreat agriculture.
In Nicaragua, FMO and Finnfund financed MLR Forestal, a company managing cocoa and teak plantations, which is controlled by gold mining interests responsible for displacement of Afro-descendant and Indigenous communities and environmental degradation.
The International Finance Corporation and the Inter-American Development Bank Invest have recently approved loans to Pronaca, Ecuador’s 4th largest corporation, to expand intensive pig and poultry production despite opposition from international and Ecuadorian groups, including local indigenous communities whose water and lands have been polluted by the company’s expansive operations.
The Inter-American Development Bank Invest is considering a new $43 million loan for Marfrig Global Foods, the world’s 2nd largest beef company, under the guise of promoting “sustainable beef.” Numerous reports have found Marfrig’s supply chain directly linked to illegal deforestation in the Amazon and Cerrado and human rights violations. The company has also faced corruption charges. A global campaign is now calling for PDBs to immediately divest from all industrial livestock operations.
We need better mechanisms to build food sovereignty
Governments and multilateral agencies are finally beginning to acknowledge that today’s global food system has failed to address hunger and is a key driver of multiple crises, from pandemics to biodiversity collapse to the climate emergency. But they are doing nothing to challenge the corporations who dominate the industrial food system and its model of production, trade and consumption. To the contrary, they are pushing for more corporate investment, more public private partnerships and more handouts to agribusiness.
This year’s summit of the development banks was deliberately chosen to follow on the heels of the UN Food Systems Summit. It was advertised as a global forum to find solutions to problems afflicting the global food system but was hijacked by corporate interests and became little more than a space for corporate greenwashing and showcasing industrial agriculture. The event was protested and boycotted by social movements and civil society, including through the Global People´s Summit and the Autonomous People´s response to the UN Food Systems Summit, as well as by academics from across the world.
The Finance in Common summit, with its focus on agriculture and agribusiness, will follow the same script. Financiers overseeing our public funds and mandates will gather with elites and corporate representatives to strategize on how to keep the money flowing into a model of food and agriculture that is leading to climate breakdown, increasing poverty and exacerbating all forms of malnutrition. Few if any representatives from the communities affected by the investments of the development banks, people who are on the frontlines trying to produce food for their communities, will be invited in or listened to. PDBs are not interested. They seek to fund agribusinesses, which produce commodities for trade and financial schemes for profits rather than food for nutrition.
Last year, a large coalition of civil-society organizations made a huge effort just to get the development banks to agree to commit to a human rights approach and community-led development. The result was only some limited language in the final declaration, which has not been translated into action.
We do not want any more of our public money, public mandates and public resources to be wasted on agribusiness companies that take land, natural resources and livelihoods away from local communities. Therefore:
We call for an immediate end to the financing of corporate agribusiness operations and speculative investments by public development banks.
We call for the creation of fully public and accountable funding mechanisms that support peoples' efforts to build food sovereignty, realize the human right to food, protect and restore ecosystems, and address the climate emergency.
We call for the implementation of strong and effective mechanisms that provide communities with access to justice in case of adverse human rights impacts or social and environmental damages caused by PDB investments.
Fundación Plurales - Argentina
Fundación Ambiente y Recursos Naturales (FARN) - Argentina
Foro Ambiental Santiagueño - Argentina
Armenian Women For Health &Healthy Environment NGO /AWHHE/ - Armenia
Australian Food Sovereignty Alliance - Australia
SunGem - Australia
Welthaus Diözese Graz-Seckau - Austria
Turkmen Initiative for Human Rights - Austria
FIAN Austria - Austria
Oil Workers' Rights Protection Organization Public Union - Azerbaijan
Initiative for Right View - Bangladesh
Right to Food South Asia - Bangladesh
IRV - Bangladesh
Bangladesh Agricultural Farm Labour Federation [BAFLF] - Bangladesh
NGO "Ecohome" - Belarus
Eclosio - Belgium
AEFJN - Belgium
FIAN Belgium - Belgium
Entraide et Fraternité - Belgium
Africa Europe Faith & Justice Network (AEFJN) - Belgium
Coalition for Fair Fisheries Arrangements - Belgium
Eurodad - Belgium
Friends of the Earth Europe - Belgium
Alianza Animalista La Paz - Bolivia
Instituto de Estudos Socioeconômicos (Inesc) - Brazil